WBS Facts Project Selection Methods

The WBS is a deliverables-based Scoring Models Net Present Value

decomposition of the project scope. Also known as weighted scoring This formula finds the present
Some activities are allowed in the models, these use a common set value on the project for each year
WBS (for example, testing). of values to “score” each project’s the project promises a return:
The WBS can be based on a pre- worthiness. 1. Each time period’s promised
vious project and this is a called Benefit-Cost Ratios return is calculated into pres-
a WBS template, also written as ent value.
(BCRs)
WBT. 2. Sum all of the time periods’
The WBS is needed for five project This model compares benefits present value.
management activities: to costs. Consider a BCR of 4:1
3. Subtract the project’s original
versus another project of 2:5.
1. Defining project activities investment from the sum.
2. Cost estimating Future Value(FV) 4. An NPV greater than one is
3. Cost budgeting How much is the Present Value good, less than one is bad.
4. Identifying the project risks (PV) worth in the future?
5. Qualitative risk analysis Constrained
FV=PV(1+i)n where:
Scope baseline is comprised of the
Optimization Methods
FV is the value to be determined Complex formulas to determine a
project scope statement, the WBS,
project’s worthiness to be select-
and the WBS Dictionary. PV is the current investment
ed. Examples include:
Chart of accounts is an account- i is the interest rate
ing system to track project costs by • Linear programming
n is the number of time periods
category (labor, specific materials, • Nonlinear programming
contractor rates). A project’s chart of Present Value • Integer algorithms
accounts works with the organiza- How much will a future value be • Dynamic programming
tion’s chart of accounts for specific worth in today’s dollars?
deliverables, work, and/or materials.
• Multiobjective programming
PV=FV/(1+i)n where:
Code of accounts is a numbering Project Purpose
system to identify the deliverables PV is the value to be determined Projects are chartered to give the
down to the work package within a FV is the promised return on project manager the authority to
WBS. The PMBOK® Guide uses a investment act on behalf of the project spon-
type of code of accounts: 5.3.3.2. sor or customer.
i is the interest rate
The WBS dictionary defines all of Projects are chartered to solve a
the project deliverables, resources, n is the number of time periods
problem or seize an opportunity.
cost and time estimates, and as-
sociated information for each work
Project selection is part of an organization’s portfolio management process.
package.

Managing the Project Change Control Components

All changes must be documented and
Project Management Information System entered into the PMIS. There are four
change control systems (CCS). Scope
changes go on to the configuration
management system for features and
Scope Schedule Cost Contract functions documentation. All changes pass
through integrated change control. The
CCS CCS CCS CCS relevant project components are updated
based on the change that has occurred.

Configuration Integrated Change Control

Management
System Product Project WBS Project
(Only scope changes) WBS
Scope Scope Dictionary Plan
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How to Calculate Float
Complete the Forward Pass
1. The Early Start (ES) of the first task is one. The Early Finish (EF) is a task’s ES, plus the duration, minus one.
2. The ES of the next task(s) will be the EF for the previous activity, plus one.
3. The EF for the next task(s) equals its ES, plus the task duration, minus one.
4. Use caution with predecessor activities; the EF with the largest value is carried forward.
Complete the Backward Pass
1. Backward pass starts at the end of the PND. The Late Finish (LF) for the last activity in the PND equals its EF
value. The Late Start (LS) is calculated by subtracting the duration of the activity from its LF, plus one.
2. The next predecessor activity’s LF equals the LS of the successor activity minus one.
3. The LS is again calculated by subtracting the task’s duration from the task’s LF, plus one.
Calculate Float
1. To calculate float, the ES is subtracted from the LS and the EF is subtracted from the LF. The following
illustration shows a completed PND with the float exposed.

Duration
5 7
3
Float
ES EF B
4
1 4
8 10
3 2
11 12
Forward pass formula: A D
ES+du-1=EF
1 4 5 10
6 11 12
Backward pass formula:
LF-du+1=LS C Critical LS LF
5 10 Path

Time Facts Task Miscellaneous

Lag: Waiting time between activities
(positive time). Relationships Time Facts
Lead: Activities are moved closer Finish-to-start (FS): This Three-point estimate: This time
together or even overlap (negative relationship means Task A must estimate approach uses three
time). complete before Task B can factors to predict the duration
begin. This is the most common of each task. The formula
Crashing: Adding resources to relationship. is (optimistic + most likely +
reduce the project duration. This
Start-to-start (SS): This relationship pessimistic) divided by three. It
adds costs to the project.
means Task A must start before Task is an average of the three time
Fast tracking: Allows project factors for each activity.
B can start. This relationship allows
phases to overlap to reduce the both activities to happen in tandem. PERT (Program Evaluation
project duration. This adds risk to
Finish-to-finish (FF): This and Review Technique): This
the project.
relationship means Task A must approach is weighted on the most
Free float: The amount of time likely estimate. The formula is the
complete before Task B does.
an activity can be delayed without optimistic, plus four times the most
Ideally, two tasks must finish at
delaying the next activity’s start date. likely, plus the pessimistic; this
exactly the same time, but this is not
Total float: The amount of time always the case. sum is then divided by six. I like to
an activity can be delayed without write this as (O + (4ML) + P)/6.
Start-to-finish (SF): This
delaying the project’s end date. relationship is unusual and is Critical chain: Network
Float: An opportunity to delay an rarely used. It requires Task A to diagramming approach based on
activity. Also called slack. start so that Task B may finish. It the availability of project resources
is also known as just-in-time (JIT) to determine project completion.
scheduling. Uses buffers (feeding buffers) of
time instead of project float.

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Earned Value Management
Name Formula Mnemonic Device
Planned Value % planned completion Please
Earned Value % complete x BAC Eat
Cost Variance CV=EV-AC Carl’s
Schedule Variance SV=EV-PV Sugar
Cost Performance Index CPI=EV/AC Candy
Schedule Performance Index SPI=EV/PV S (this and the next two spell SEE)
Estimate at Completion EAC=BAC/CPI E
Estimate to Complete ETC=EAC-AC E
To-Complete Performance (BAC-EV)/(BAC-AC) The
Index (Using BAC)
To-Complete Performance (BAC-EV)/(EAC-AC) Taffy
Index (Using EAC)
Variance at Completion VAC=BAC-EAC Violin

BAC=$100,000
Total Project
Estimate Types
Rough order of magnitude: Simple,
25% Month 6 early estimate. Range of variance is
Complete =50% -25% to +75% for the project
completion.
Budget estimate: Early planning
estimate and/or top-down approach.
Earned Value Actual Costs Planned Value Range of variance is -10% to +25% for
%COMP x BAC How much What the project should be worth the project completion.
$25,000 was spent? at this point in the schedule
$27,000 $50,000 Definitive estimate: Most accurate
estimate, but takes longest to
Five EVM Rules to Memorize complete; uses the bottom-up
approach. Range of variance is -5% to
1. Always start with earned value.
+10% for the project completion.
2. Variance means subtraction.
Bottom-up: Requires a WBS and
3. Indexes are “something” divided by “something” and they show
accounts for each work package.
performance for the project objectives.
4. When it comes to any index, the closer to 1 the better. Analogous: Creates an analogy
between projects; also known as a top-
5. Variances can be positive or negative. down estimate.

Project Cost Types Parametric: Uses a parameter (cost

per ton, cost per unit) for the estimate.
Variable costs: The cost of the deliverable, service, or materials can
fluctuate based on varying factors. Quality Costs
Fixed costs: A constant “fixed” cost throughout the project. Cost of quality is the cost to achieve
the expected quality on a project. Con-
Indirect costs: An expense that can be shared with other projects or the
sider training, safety, and materials.
organization, such as rent, phone, or equipment.
Cost of poor quality, also known as
Direct costs: Costs that are directly tied to the project.
the cost of nonconformance to quality,
Sunk costs are monies that have been invested into a project. Sunk costs is the cost of not achieving quality: re-
are gone, they are “sunk” into a project. work, loss of life or limb, loss of sales.
An opportunity cost is the amount of an opportunity that is given up.
Consider: Project A is worth $55,000 and Project B is worth $89,000,
you’d choose Project B to do. The opportunity is $55,000—the amount of Don’t change your answers. Most people
Project A that you can’t do because of the opportunity of Project B. change correct answers to wrong answers.
624
Project Management Charts and Values
Run Chart Pareto Chart

500
100%

Total Failures
250 75%

-500 Date of measurement 50%

215
Au Au Au Au Au Au Au Au Au Au Au Au Au Au Au
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
190
Series 1 -28 270 -285 260 -302 -300 220 405 300 272 200 255 230 265 201
123 25%
Units created

Control Chart 50 10%

Rule of Seven
Nonrandom Identified Categories of Failures

Normal Distribution
Requirements
Control Limits
Mean
Mean

Relative Frequency
Assignable
Causes
Out of Control

Cause-and-Effect Chart
Also Called Fishbone and Ishikawa Chart

Major Causes -3 -2 -1 0 1 2 3
Sigma Values Standard Deviation
+/- 1 Sigma = 68.26% (P-O)/6
Effect:
Problem to +/- 2 Sigma = 95.46% P=Pessimistic
Be Solved O=Optimistic
+/- 3 Sigma = 99.73%
+/- 6 Sigma = 99.99%

Hard questions and easy questions are worth

the same: one point. Don’t spend too much
Contributing
Causes
time laboring over a question. Choose an
answer, mark it for review, and then move on.

Quality Facts
Quality is a conformance to requirements and a fitness for Quality control is an inspection-driven process to keep
use. It is fulfilling the project scope. mistakes from entering the customers’ hands.

Grade is a category or rank given to entities having the Scope creep is the addition of small, undocumented
same functional use but different technical characteristics. changes that bypass the scope change control system.
Scope creep is sometimes called project poison.
Gold plating is the process of adding extra features to
drive up costs and consume the budget. A scatter diagram is like a run chart, but it instead
tracks the relationship between two variables. The two
Quality assurance is a prevention-driven process to do the variables are considered related the closer they track
project work right the first time. against a diagonal line. Consider the relationship of
costs and schedule.
625
Project Management Professional Theories
Maslow’s Hierarchy of Needs Parkinson’s Law
Maslow believed that we have five needs; we’re on a Individuals allow their work to consume all of their time.
quest to satisfy these needs. The needs are, from the Work will expand to fill the amount of time allotted to it.
bottom up:
McGregor’s X and Y
Physiological. We need air, food, clothing, and shelter. Management’s perspective of employees. X people are
Safety. We need safety and security. bad, lazy, and need to be micromanaged. Y people are self-
Social. We need friends, approval, and love. directed. Most managers have X and Y attributes.
Esteem. We need respect, appreciation, and approval.
Self-actualization. We need personal growth, Ouchi’s Theory Z
knowledge, and fulfillment. Workers do well if motivated. This provides participative
management, familial work environment, and lifelong
employment. Known as Japanese Management Style.
Herzberg’s Theory of Motivation
There are hygiene agents and motivating agents. McClelland’s Theory of Needs
Hygiene agents are expectations for employment: Needs are acquired over time and are shaped by life
paycheck, insurance, safe working environment. experiences. Our needs are categorized as achievement,
Motivating agents are motivators for employees such affiliation, and power. McClelland used a Thematic
as bonuses, career advancement, opportunity to grow. Apperception Test (TAT) to determine an individual’s needs.
Hygiene agents will not motivate, but their absence will
demotivate. Vroom’s Expectancy Theory
People behave based on what they believe (expect) their
Halo Effect behavior to bring them.
All opinions are formed by one component. A great
engineer doesn’t always make a great project manager.

PMI HR Terms Project Manager Powers

Role: This person is accountable by the title they Expert: The authority of the project manager comes from
possess (network engineer, business analyst). experience with the technology the project focuses on.
Responsibility: The owner of the assigned work is Reward: The project manager has the authority to reward
accountable for the work. the project team.
Authority: Based on organizational structure; Formal: The project manager has been assigned by senior
autonomy to make decisions, approvals, and manage management and is in charge of the project. Also known as
resources. positional power.
Stakeholder Identification Coercive: The project manager has the authority to dis-
Stakeholder analysis: This is a three-step process of cipline the project team members. This is also known as
identifying the project stakeholders early in the project, “penalty power.”
identify the impact/support of each stakeholder, and then Referent: The project team personally knows the project
plan how to influence stakeholders to act in given situa- manager. Referent can also mean the project manager
tions. refers to the person who assigned him the position.
Stakeholder register: Documents stakeholder identifica-
tion, assessment of influence, and stakeholder type. Conflict Management
Stakeholder classification models: These are grids to Problem solving: Both parties work together for the good
plot out stakeholder power, influence, and interest in the of the project in a spirit of problem solving. Also known as
project. Here are four common models: confronting. This is a win-win solution.
Power/interest grid - how much power/interest do the Compromising: Both parties give up something, often in a
stakeholders have? heated scenario. This is a lose-lose solution.
Power/influence grid - how much power/influence do Forcing: One party quickly forces their solution over anoth-
the stakeholders have? er. Often done by seniority. This is a win-lose solution.
Influence/impact grid - how much influence (involve- Withdrawal (also known as avoidance): One party
ment of decisions) and impact on project change do leaves the discussion. This is a yield-lose solution.
the stakeholders have? Smoothing: The differences of the problem are down-
Salience model - classifies stakeholders based on played. This is a delay and is a lose-lose solution.
power, urgency, and legitimacy for the project.
Be careful who sees the stakeholder management strategy because it may contain sensitive information.

626
 Project Communications Management Facts
Communication channels formula: N(N-1)/2, where Active listening: participating in the conversation
N represents the number of stakeholders. through verbal and nonverbal signs of message
55% of communication is nonverbal. receipt.

Paralingual: the pitch, tone, inflection of the speaker Messages are transmitted; knowledge is
that affects the content of the message. transferred.

Effective listening: watching the speaker’s body Acknowledgment of a message doesn’t mean
language, interpreting paralingual clues, asking acceptance of the message.
questions for clarity, and offering feedback.

Communications Model The sender sends the message

and it is encoded. The medium
transfers the message. The
decoder decodes the message
Sender Receiver for the receiver. Noise on the
medium could interfere with
the message. Barriers prevent
communication from happening. An
acknowledgment of the message
Encoder Medium Decoder doesn’t mean agreement with the
message. Communication happens
Noise when information is transferred.

Risk Responses Risk Terms

Avoidance: Avoid the risk. Contingency fund: An amount of Business risk: Risks that can offer
Mitigation: Reduce the probability or funds used to offset a project’s risks. an upside or a downside (both
impact of the risk event. Secondary risks: A risk response positive and/or negative impacts). .

Acceptance: The risk may be small creates another risk. Qualitative analysis: Qualifying the
so the risk may be accepted. Residual risks: A risk response may risks for their legitimacy. This is a
create small generally accepted risks. very quick, subjective approach.
Transference: The ownership of the
risk is transferred to some other party, Triggers: Condition, event, or warning Quantitative analysis: Quantifies
usually for a fee. sign that a risk is about to happen. the risk exposure based on
Usually “triggers” a risk response. evidence, research, and in-depth
Exploit: A positive risk that a project analysis of the risk events.
wants to take advantage of. Positive risk: Risks with a positive
impact. Utility function: A person’s or
Share: A positive risk that can be organization’s willingness to accept
shared with the organization or other Negative risks: Risks with a negative risk.
projects. impact. Relative to the project priority as
Enhance: A response that ensures Pure risk: Only offers a negative high-priority projects are typically
that a positive risk will likely happen. impact (injury, fire, theft, destruction). risk adverse. Also known as risk
tolerance.

Quantitative Risk Matrix

Risk Probability Impact Ex$V The risks are identified and record-
ed in the risk register. The
A .60 -$10,000 -$6,000 probability of each risk is found
B .20 -25,000 -5,000 as is the risk impact. The
probability times the impact equates
C .40 -40,000 -16,000 to the Expected Monetary Value
(Ex$V). Some risks can have a pos-
D .10 35,000 3,500
itive impact. The sum of the Ex$V
Risk exposure -$23,500 is the risk exposure. The positive
opposite of the risk exposure is the
Contingency reserve $23,500 amount needed for the contingency
reserve.
627
Procurement Procurement Process
Terms Buyer
Contracts: An offer and consideration.
SOW Sellers Bidder
Contracts are backed by the court Conference
system. • IFB
Cost reimbursable contracts: Risk • RFQ
is with the buyer as the buyer pays for • RFP
cost overruns. SOW Updates
Fixed-price (lump-sum contracts):
Risk is with the seller as seller pays for
The buyer creates a statement of
cost overruns.
work (SOW) with an invitation for
Time and materials contract: Buyer
Sellers Seller
bid (IFB), request for quote (RFQ),
pays for the time and materials of the Responses or request for proposal (RFP) for
vendor. Must have a not-to-exceed • Bid the vendors.(IFBs and RFQs both
(NTE) clause. • Quote want just a price; a proposal wants
Purchase order: A unilateral form of a • Proposal ideas.)
contract.
A bidder conference allows sellers
Letter of intent: The buyer tells the to ask questions about the SOW.
vendor they intend to do business with The buyer may create an updated
them; not a binding agreement. Buyer Seller SOW to give back to the sellers that
Letter contract: Generally short-term Selection attended the bidder conference.
purchase used as a stopgap or emer-
Sellers respond with a bid, quote,
gency response. Contract or proposal. The buyer completes
Bidder conference: Vendors all meet seller selection and creates a con-
with the buyer to discuss the details tract.
of the statement of work so they may
Decentralized contracting is done by the PM; centralized contracting
prepare a bid, quote, or proposal.
is done with a purchasing agent or through a central procurement office.

Organizational Structures
Projectized Balanced Matrix Functional
• PM has the most authority. • PM and functional managers bal- • PM has little authority.
• Team is typically assigned to the ance power. • Organization is structured by
project full-time. • Power struggles are common. departments or functions (sales,
• Competition between teams may Internal competition may increase manufacturing, IT, etc.).
hurt the organization. for resources. • PM may be called a project
• Team is uncertain of future work • Project team members are on coordinator or expeditor.
after the project is completed. multiple projects. • The functional manager has all
• PM is full-time and has • PM is full-time and has part-time of the authority.
full-time administrative staffing. administrative staffing. • Focus is on completing the proj-
ect work along with day-to-day
Strong Matrix Weak Matrix work.
• PM has strong authority. • PM has less power than functional • PM is part-time and has part-
managers. time administrative staffing.
• Typical full-time resources from
functional departments. • Internal competition may increase
for resources. Projectized
• Internal competition may increase
for resources. • Project team members are on
er

multiple projects.
• Project team members are on
w

• PM is part-time and has part-time

Po

multiple projects. Matrixes

t

administrative staffing.
c

• PM is full-time and has full-time

je
ro

administrative staffing.
P

Organizational structure affects questions; pay attention to who has the power. Functional

628
47 Processes and 10 Knowledge Areas
Process Groups
Knowledge
Areas Initiating - 2 Planning - 24 Executing - 8 M&C - 11 Closing - 2
Project Develop project Develop Direct and Monitor and Close project or
Integration charter project manage project control project phase
Management management work work
plan Integrated
change control
Project Plan scope Validate scope
Scope management Control scope
Management Collect
requirements
Define scope
Create WBS

Spend time on Initiating, Executing, and Closing. There are few processes, but many questions. Work smart, not hard.
Project Plan schedule Control schedule
Time management
Management Define activities
Sequence
activities
Estimate activity
resources
Estimate activity
durations
Develop
schedule

Project Plan cost Control costs

Cost management
Management Estimate costs
Determine budget
Project Plan quality Quality Control quality
Quality management assurance
Management
Project Plan HR Acquire team
HR management Develop team
Management
Manage team
Project Communications Manage Control
Communication planning communications communications
Management
Project Plan risk Control risks
Risk management
Management Identify risk
Perform
qualitative risk
analysis
Perform
quantitative
risk analysis
Plan risk
responses
Project Plan Conduct Control Close
Procurement procurement procurements procurements procurements
Management management
Project Identify Plan stakeholder Manage Control
Stakeholder stakeholders management stakeholder stakeholder
Management engagement engagement
629